Wednesday, October 17, 2018
Business

Opendoor comes to Tampa. Is this the next big thing in selling our homes?

There aren’t a lot of options when it comes to selling our homes. We can do it ourselves or have a company auction them off.

Most of us follow the old-fashioned route: Clean the place up, enlist a Realtor and wait for offers to roll in.

In recent years, a few companies have tried to persuade us to try something new. They want to make selling so easy that we can’t help but say yes.

They make cash offers — at fair prices. In return, the companies charge the seller a service fee, usually about the same as the standard Realtor commission. They quickly spruce up the homes and list them for sale, generally making more money on the service fee than any markup on the price.

San Francisco-based Opendoor moved into the Tampa Bay market this summer. Already in Orlando and 13 other cities across the country, the company plans to expand to Jacksonville later this year, and hopes to be in 50 markets in 2020, including parts of South Florida.

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Opendoor bought about 80 homes here in August and is on track for 100 in September, said Candice Bradley, who heads up Opendoor’s Tampa operation. She characterized that as a good start. For perspective, the company sometimes has 500 homes listed a month in Phoenix, where it opened in 2014.

So far, Opendoor has mostly targeted ZIP codes in Pasco and Hillsborough counties and homes between $100,000 and $500,000. Pinellas is next.

"We are seeing a lot of potential in this area," Bradley said Tuesday, standing in a South Tampa home Opendoor bought for $437,000 in late August.

Opendoor and its competitors including Offerpad are attracting sellers on convenience. Their websites allow would-be sellers to provide info about their homes including location, square footage and the number of bathrooms. The companies then kick out an offer.

"The offers we give are very accurate and very competitive," said Cristin Culver, head of Opendoor’s local communications. "If they weren’t, no one would sell us their home."

If you like the price, Opendoor sends experts to assess the condition. Needed repairs are noted. The company can walk away if the assessors don’t like what they see. Otherwise, Opendoor will update the offer or stick with the original price.

Agree to sell to Opendoor and you get to pick a closing date anytime within 60 days and can change it five times. The company charges the seller a 5 to 7 percent service fee, depending on factors including location and how quickly the home is expected to sell.

Among the advantages: No prettying up your home for a bunch of strangers. No waiting for offers. No open houses. No dealing with nervous buyers who cancel at the last minute. And the cash sale means no worrying about a buyer securing a mortgage.

The concept isn’t for everyone. Sometimes the offers are too low or the required repairs too much. And in a rising market, accepting the offer forgoes the possibility of benefiting from multiple buyers bidding for the home, sometimes driving up the list price.

Plus, Opendoor isn’t looking for fixer-uppers. Minor repairs are fine. But the company strives to list the homes for sale within 15 days of buying them.

In the Tampa Bay area, Opendoor has listed the homes for more than it paid, but often not by much, especially when the cost of repairs gets factored in.

Take a 2-bed, 2-bath home in Port Richey. Opendoor bought it in July for $109,000 and sold it this month for $111,000, Pasco County records show. The company bought another Pasco home for $119,000 and sold it weeks later for $132,000. The $437,000 South Tampa home is listed for $455,000.

Anyone buying a home from Opendoor can cancel the sale at any time. The purchase also comes with a 30-day money back guarantee.

"We are trying to take away the fear and uncertainty that comes with buying a home," Culver said.

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Opendoor has had 23,000 buyers and sellers nationwide and expects that to grow rapidly as it expands into more cities. Culver was quick to point out that the company isn’t trying to elbow out Realtors. It works with them and paid $20 million in commissions last year, she said.

Selling homes this way is popular enough that Coldwell Banker, the nation’s largest real estate brokerage, recently announced a similar program, called cataLIST, though it keeps real estate agents involved throughout the process.

Privately-owned Opendoor would not reveal if it’s profitable. SoftBank Investment Advisers, however, likes what it sees. The firm announced Thursday that it would invest $400 million in Opendoor, which has also secured $2 billion in bank financing.

"We believe that (the Opendoor team is) redefining home buying and selling by rethinking the status quo and providing a faster and more seamless experience for the customer," said Jeffrey Housenbold, SoftBank’s managing partner.

It hasn’t hurt that prices have been rising in most of Opendoor’s cities. That can help mitigate losses if the company overpays for a home or can’t sell as quickly as expected. The test could come when prices stagnate or drop, or if sales dry up.

Culver was confident they could stay ahead of downturns.

"The more markets we are in, the more data we collect," she said. "We feel strongly about our ability to manage risk."

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Contact Graham Brink at [email protected] Follow @GrahamBrink.

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